In re Echelman

In the Matter of GEORGE ECHELMAN, Petitioner,v.C. CHESTER DU MOND, as Commissioner of Agriculture and Markets of the State of New York, Respondent.

PROCEEDING under article 78 of the Civil Practice Act (transferred to the Appellate Division of the Supreme Court in the third judicial department by an order of the Supreme Court at Special Term, entered in Albany County) to review a determination of respondent, as Commissioner of Agriculture and

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Markets, refusing to permit petitioner as a licensed milk dealer to purchase milk from farmer-producers. Section 258-c of the Agriculture and Markets Law (as amd. by L. 1950, ch. 502) provides that: 'No license shall be denied to a person not now engaged in business as a milk dealer, or for the continuation of a now existing business, and no license shall be denied to authorize the extension of an existing business by the operation of an additional plant or other new additional facility, unless the commissioner finds by a pre-ponderance of the evidence, after due notice and opportunity of hearing to the applicant or licensee, one or more of the following: (1) that the applicant is not qualified by character or experience or financial responsibility or equipment properly to conduct the proposed business; (2) that the issuance of the license will tend to a destructive competition in a market already adequately served; or (3) that the issuance of the license is not in the public interest.'

COUNSEL

George J. Sandler and Gustav P. Blaustein for petitioner.

George C. Fiesinger and Robert G. Blabey for respondent.

HALPERN, J.

This is a proceeding under article 78 of the Civil Practice Act to review a determination by the respondent denying the petitioner's application for a license extension authorizing him to purchase milk from farmer-producers.

The petitioner held a license issued by the respondent authorizing him to sell milk at retail and wholesale in the city of Syracuse, New York. While the license on its face also contained a reference to the licensee's purchasing milk from producers and co-operatives, it did not authorize him to make such purchases without further approval by the respondent. Up to the time of the application with which we are here concerned, the sole operations of the petitioner under his license consisted of his purchasing bottled milk from a milk plant and reselling it to his customers upon his Syracuse milk route.

The petitioner was also a farmer-producer himself, being the owner and operator of two dairy farms in the vicinity of Syracuse. In July, 1952, the petitioner entered into a contract with the Netherland Company, Inc., the operator of a milk plant in Syracuse, to sell his raw milk to it and, in turn, to purchase from the Netherland Company bottled milk for sale upon his route. The quantity of milk produced by the petitioner upon his farms was not sufficient to provide full truck loads and the petitioner conceived the idea of purchasing additional milk from nearby farmers so as to have full truck loads to deliver to the Netherland

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Company. Under its contract, the Netherland Company agreed to purchase all the milk delivered by the petitioner; there was no reference in the contract to the fact that some of the milk which the petitioner proposed to deliver might be purchased by him from others nor was there any provision for the segregation of such milk from the milk produced upon the petitioner's own farms.

The petitioner applied in October, 1952, for an extension of his license as a milk dealer so as to authorize him to purchase raw milk from producers for resale to the Netherland Company. A hearing was held upon this application and thereafter the application was denied upon two grounds: (a) that the petitioner was not qualified to conduct the proposed business because he lacked the necessary equipment; (b) that the proposed extension of the petitioner's license would tend to a destructive competition and would not be in the public interest.

The substance of the respondent's holding was that the petitioner ought not to be allowed to engage in the type of operation which he proposed. The petitioner had no equipment to weigh or test the milk which he proposed to purchase, or to comply with the other requirements of the Agriculture and Markets Law. He proposed to leave all this to his subvendee, the Netherland Company, although, as noted above, there was nothing in the Netherland Company's contract which required it to make separate tests or to keep separate records with respect to the milk purchased by the petitioner from others and resold by him to the Netherland Company. Furthermore, the commissioner found that, even if the Netherland Company undertook to do this work, the arrangement would be an objectionable one because it would divide responsibility for compliance with the law between the petitioner and the Netherland Company in a manner which would greatly increase the difficulties of supervising and enforcing compliance. The commissioner differentiated the plan of operation submitted by the petitioner from the transportation of milk by milk haulers who act as agents of the producers in selling the milk to milk plants; they do not purchase from the producers and resell to the plant; the plant is the direct purchaser from the producer and is fully responsible for compliance with all provisions of law.

The commissioner found, in effect, that, in the light of the methods of operation generally prevailing in the milk industry and the problems with which the commissioner must deal in policing the industry, the petitioner's ...

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